4 Apr 2014

The unexpected costs of the ‘welfare revolution’

If the government’s “welfare revolution” is to work , then it has to work in places like Torfaen in south Wales.

Blighted by unemployment and with high numbers of people on some sort of long term sickness benefit the avowed aim of ending a “culture of worklessness” needs to gain traction here.

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It’s unsurprising then that it was chosen to trial direct payments – one of the most fundamental building blocks of the government’s Universal Credit.

They’ve been testing how direct payment of housing benefit will work for social housing tenants. Up until now, their housing benefit has been going straight to the landlord. The direct payment project though sees the money paid into the tenant’s bank account and it’s then up to them to make sure their rent is paid.

The idea is that it more closely replicates working life, giving people on benefits more responsibility, more independence. But as with so many ideas, the practice is more complicated than the principle suggests.

Around a third of tenants fell into arrears and had to be put back onto the old system. And that figure could have been very much higher, according to Bron Afon Community Housing Association, if they’d not dramatically intensified the support they gave to tenants.

Going round to see tenants to remind them their rent was due, texting them with the same, endlessly phoning to keep up the pressure. It all sounds rather pathetic in the true sense of the word.

‘Something comes up’

Why can’t grown men and women take responsibility for simply using money put into their bank account for rent for just that – rent?

Well everyone we spoke to had the same answer. When you live on benefits, with every penny accounted for, an extra few hundred in the bank looks too tempting if “something comes up” – and the problem, they said, is that “something” always comes up.

You need to buy shoes for the children, or the washing machine breaks, or you want to buy Christmas presents.

That’s what Gary Erickson did when his housing benefit arrived in his bank. He says he knew it was wrong, he knew it was a mistake, but he did it and he knows he’d have done it again.

He’s not particularly proud of it, nor actually particularly ashamed, just realistic.

When I said to him the government felt he should be taking responsibility for his money for his bills he just said: “It’s too big a responsibility not to spend it. It’s not just me, it’s lots of people round here.”

The Department for Work and Pensions say this is the point of these projects – to learn who is and isn’t able to manage their own money. They have put safeguards in place so that if people slip into arrears they can go back onto the old system, and return once those arrears are cleared.


The local Citizens Advice Bureau want those safeguards to go further. They want anyone who asks to be able to opt out.

But the DWP clearly think that’s too defeatist. They say just because someone can’t manage now, doesn’t mean they won’t be able to deal with direct payments later down the line.

Few we spoke to disputed the principle of giving people responsibility for paying is a good one. But the big questions is how much it may cost in the end.

Roll the direct payment scheme out across the country and if the figures remain that around a third of tenants fall into arrears is that sustainable.

The chief executive of Bron Afon Community Housing Association, Duncan Forbes, raises an interesting point. So far his association has spent 132,000 pounds on supporting tenants through the process – and that’s with only about a quarter of all their working age tenants being put on the project so far.

He says the association has no choice and will continue doing that. The only thing is that it means the money will come out of their budget for trying to create new homes.

So a laudable principle may create some unexpected costs.

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